Vallourec, the French steel-tube maker, announced on Friday that it is anticipating its second-quarter results to surpass its previous expectations. The company attributes this success to its strong performance in the Middle East and a decrease in projected losses in Germany.
As a result of this positive news, Vallourec shares experienced a significant increase, trading at 5.6% higher at EUR12.01 as of 0741 GMT.
The company now expects its second-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach approximately 370 million euros ($415.4 million). This surpasses its previous projection of around EUR320 million and is in line with its first-quarter performance.
Vallourec also revealed that cash generation in the quarter is anticipated to be around EUR110 million, an improvement from breakeven levels. Furthermore, excluding any potential asset sales, the company expects cash generation to remain positive in the second half of the year. This positive trend will contribute to a decrease in net debt.
The company predicts that net debt at the end of the quarter will be approximately EUR870 million, down from the previous estimate of around EUR1 billion. Looking ahead, Vallourec expects its EBITDA for 2023 to range between EUR950 million and EUR1.1 billion.
Financial analysts from Jefferies, Jamie Franklin, and Mark Wilson, view these revised expectations as a positive development for Vallourec. They believe it serves as clear evidence that the company is on the right path.
